How much innovation?

Article 8 of the Decision sets out criteria by which proposals will be selected for funding. Assuming eligibility criteria are met, the selection is based solely on the request for public subsidy per unit energy and on the minimum of one NER300 project per Member State.

During NER300’s negotiation within the Commission, DG Research’s agenda was to try to ensure that proposals for projects that go beyond the specifications laid down in Annex I A II are given credit when they are evaluated, adding a second dimension to the evaluation. Although ultimately unsuccessful, the vestiges of DG Research’s campaign are still visible, for example in the invitation to concentrating solar power projects to demonstrate dry cooling, hybridisation and heat storage. Under the selection rules, project developers have an incentive only to satisfy compulsory technical eligibility criteria at minimal cost to the public purse per unit energy output. Optional extras that make this mission harder to achieve will be ignored.

Compared to what baseline?

To receive NER300 funding, a renewable energy installation must feature “innovative” technology. If an installation comprises both innovative and state-of-the-art technology, only the innovative part will receive the subsidy. Article 6 (3) of the Decision takes “innovative” to mean technologies that are not “existing” or “proven”, with Annex I A II defining the number of projects that the Commission, at present, is willing to see funded and the technical specification each must meet. For some technologies, the specification is more detailed than for others. The specifications for PV, as they stand in the Decision, are too loose to be useful for the purpose of framing a proposal because installations that fit them are already operating commercially, so a proposal could get caught by the over-riding consideration of avoiding “existing” or “proven” technology.

Specifications less technically challenging than the state of the art are also easy to spot in the wind category. But the problem doesn’t stop there: it might indeed be the case that no installation meeting a specification currently exists in the world, but what if, by time the project proposal is submitted, it does? That might make the project ineligible for NER300 funding. The Decision does not define when the snapshot of a technology’s performance that enables the distinction to be made between “innovative” and “existing/proven” will be taken. It could be at any one of at least four times: the moment of the publication of the call, the moment of the deadline for proposal submission, the moment of the signing of the NER300 grant agreement or the moment that the installation becomes operational.

1. NER300.com’s recommendation:

   It is very hard fairly and transparently to derive a formula that expresses a proposal’s particular innovative attribute as a value that can be added to a cost per MWh, yet this would be needed to stop the instrument being over-subscribed through a misunderstanding of the weighting of these criteria.

   Instead, innovation should be determined at the outset, with proposals competing on cost to meet a set of compulsory performance targets. The Commission will need to look into its crystal ball and forecast what performance targets are realistic for a certain point in the future. The further in the future this point is, the more uncertain the prediction, so the reference for innovation should be the performance of technology on the market at the proposal submission deadline or, possibly, at the publication of the call. The crystal ball gazing can be made easier by consulting with industry. The SET Plan provides various opportunities for this.